Bubble Burst? Nope! Just Slow Down! - AMTD Group

Please contact AMTD Asset Management Limited at (852) 3163 3288 for further product information. Please read the Important Disclosures and General Disclosures on Page 20.

Equity Research

June 30, 2017

Bubble Burst? Nope! Just Slow Down!

Home sales to slow down; sector valuation to de-rate as the strictest tightening keeps going

2016 was a harvest year for real estate developers, Home-purchase-restriction (HPR) was loosened in 2nd and 3rd tier

cities, mortgage rate was lowered, and developers recorded strong sales growth with rapid home price surge. However,

as inventory dropped to a healthy level, tightening cycle ticked in again.

Sales performance in larger cities and that in lower tier cities diverged in 5M17: GFA sold in top 36 cities declined by

25% yoy vs. national GFA sold grew by 14% yoy. Giants are expanding their market shares, mid-sized developers’

market share has been compressed further. The era of oligopoly has come.

Property sector share price on average has gained 50% YTD; sector average PE is approaching their highs in 2015

and 2012. We expect the property sector valuation to de-rate in 2H17. We selectively overweigh developers with

achievable presales growth, less share price gain YTD, and relatively low valuation. We are cautious on developers

with big share price gains.

Donald Yu Michelle Li Analyst Analyst

+852 3163 3384 +852 3163 3383

[email protected] [email protected]

mailto:[email protected]

mailto:[email protected]

June 30, 2017 China Property Sector

AMTD Equity Research 2

Contents

Executive summary ................................................................................................................................................ 3

Omni-directional tightening in 2017 ....................................................................................................................... 5

Less quota for Singles, 2-3 year of lockup period for home resold ....................................................................................... 5

More than HPR: strict approval of pre-sales price, bond issuance suspension and enlarge land supplies ............................. 6

Sales growth momentum halted............................................................................................................................. 8

Tightening policies show their efficiency. ............................................................................................................................ 8

Pre-sales price approval is the key in 2H2017 .................................................................................................................... 9

Inventories & Investment ...................................................................................................................................... 10

Last round of loosening succeed in destocking ................................................................................................................. 10

Fierce competition of land auction in 2nd tier cities, more capital flows into 3rd tier cities recently. ....................................... 11

Real estate investment come to steady and healthy growth after unreasonable growth in 2011-2013................................. 12

Consolidators are growing fast ............................................................................................................................. 13

Great financial improvement after a loosening year. ......................................................................................................... 13

Booking margins also have improved in FY16 .................................................................................................................. 14

Sales performances of listed developers are unexpectedly good....................................................................................... 15

Who have got too much land bank? ................................................................................................................................. 17

Be cautious on giants, look for safe margin after consolidators gained more YTD.............................................................. 18



Executive summary

Be cautious on giants, look for safety margin

We expect the property sector valuation to de-rate in 2H17. We selectively overweigh

developers with achievable presales growth, less share price gain YTD, and relatively low

valuation. We are cautious on developers with big share price gains YTD, as main

consolidators such as Evergrande and Country Garden performed very well YTD, up by

187% and 106%. Thanks to the rapid growth of contracted sales in 3rd tier cities. Sunac

also gained 137% YTD. We believe positive factors of 3rd tier cities have been priced in

share price of Evergrande/ Country Garden/ COGO.

The 12mth forward P/E of property sector is about 8.3x, approaching their highs in 2015

and in 2012. We look back to 6 year ago, the hardest time in 2011, the market cap

weighted P/E of property sector was only 4x. Giants and 3rd tier cities players with over

50% gain YTD should be avoided. On the other hand, names with low P/E & P/B, 15%

ROE and high dividend yield should have higher safety margin and attractive.

Omni-directional tightening in 2017

New HPR introduced in 2017 reduced valid demand in 1st tier cities. A couple used to be

allowed to own 4 units, but now is only allowed to own 2 units. The HPR requires 5 year

social security record for home buying. Buyers with unpaid mortgages are required to put

down 50%/70% down payment for their first home/second homes. 1st and 2nd tier cities

introduced 2-3 year lockup period for home resold. Presale price cap is stricter than before,

making developers to delay project launches. Land supply have been enlarged to stabilize

land price in short term.

Sales growth momentum halted

As the HPR loosened in 2016, GFA sold grew strongly by 22.5% yoy in 2016. However,

as HPR tightened again, the growth in GFA sold in 5M17 slowed down to 14.3% yoy,

comparing to a 33.2% yoy growth for 5M16. Sales performance in larger cities and that in

lower tier cities diverged in 5M17: GFA sold in top 36 cities declined by 25% yoy vs.

national GFA sold grew by 14% yoy. Most developer are patient to wait till Golden Sept. &

Silver Oct (金九银十) in order to launch projects at a desirable price. We believe the strict

tightening intends to cool down the market and lower home price, not clamp down the

market.

Inventory lowered and investment of real estate come to steady and healthy growth

Due to the strong sales in 2016/17, national inventory months have declined to a very

healthy level of only 21.3 months in May 2017, the lowest level since 2011. This gives

room and time for the tightening policies. Saleable GFA peaked in Feb. 2016. Then it

declined steadily and recorded yoy declined in Nov. 2016. It is the first time recorded yoy

decline of saleable GFA since 2004. In May 2017, saleable GFA declined by 8.5% yoy,

while saleable residential GFA further declined by 17.8% yoy. Meanwhile, the growth of

newly commence GFA are lower than that of GFA sold in 2015/2016/first 5 months of 2017.

It indicates 1) developers are more cautious on commencement, in order to avoid liquidity

crisis; and 2) uncertainty of policy trend in the near term.

Great improvement after a loosening year

18 of 29 developers have lowered their net gearing ratio in FY16. Booking GPM in FY16

have significantly improved as well. In FY15, only 4 of 29 companies recorded yoy

increase of GPM. In FY16, only 7 of 29 companies recorded decline of GPM.



The era of oligopoly has come

Listed developers’ performances are unexpectedly good. 5 companies have achieved over

50% of their target. Longfor even achieved 69% of its target. Developers mainly in 3rd tier

cities, Evergrande, Country Garden and COGO, achieved 75.9%/ 30.9%/ 126.5% yoy

growth. The era of oligopoly has come. Top 20 companies accounted for 25.2% of total

home sales in China. Top 100 companies accounted for 44.8% of total sales. 21-100

ranking companies only accounted for 19.6% of total sales. In first 5 months of 2017, top

20 accounted for 59.6% of total sales, top 100 accounted for 37.1% of total sales, 21-100

ranking companies only accounted for 22.5%.



Omni-directional tightening in 2017

New round tightening has come for cooling down home price. Stricter HPR, pre-sales price

restriction, high down payment rate and suspension of bond issuance are all applied.

Less quota for Singles, 2-3 year of lockup period for home resold

HPR policies become more specific in 1H2017. The singles and the families have different

quota to buy house. In 1st tier cities, a family is allowed to buy two units of houses. The

singles are allowed to buy only one house. New HPR reduces valid demand in 1st tier cities.

A couple was allowed to buy 4 units, but now is only 2 units. Longer social insurance

record is another barrier for non-local home buyers. The previous version of HPR require

2-3 year record of HPR policies. The updated version required 5 year record. After 1st tier

cities introducing stricter version of HPR, 2nd tier cities follow suit.

Mortgage record is also a key factor under current HPR. Home buyers with unpaid

mortgage record are required 50%/70% down payment for first home/second home. On

the other hand, in order to reduce short term investment purchase, 1st and 2nd tier cities

introduce 2-3 year lockup period for home resold in different cities.

Figure 1: New HPR introduced in 2016

Cities

Local residents Non-local residents Down payment requirement

Family quota (units)

Single quota (units)

Quota (units)

Social

Insurance Record (Years)

First Home (No mortgage record)

Second Home (No mortgage record)

First Home (With mortgage record)

Second Home (With mortgage

record)

Beijing 2 1 1 5 35% 80% 80% 80%

Shanghai 2 1 1 (For family

only) 5 35% 70% 70% 70%

Shenzhen 2 1 1 5 30% 50% 70% 70%

Guangzhou 2 1 1 5 30% 70% 70% 70%

Nanjing 2 1 1 2 30% 50% 50% 80%

Hangzhou 2 1 （included

divorce） 1 2 30% 60% 30% 60%

Suzhou 2 1 1 5 30% 70% 70% 70%

Wuhan 3 3 1 3 30% 50% 50% 80%

Xiamen 2 1 1 3 30% 70% 30% 70%

Jinan 2 2 1 2 30% 60% 30% 60%

Zhengzhou 2 2 1 2 30% 60% 60% 60%

Hefei 2 2 1 1 30% 40% 40% 50%

Nanchang 1 1 1 2 30% 40% 40% 50%

Changsha 2 2 1 1 30% 35% 30% 45%

Tianjin 2 1 1 2 30% 70% 30% 70%

Shijiazhuan No HPR No HPR 1 1 30% 60% 30% 60%

Qindao No HPR No HPR 1 1 30% 50% 30% 50%

Fuzhou 2 2 1 1 30% 50% 30% 50%

Haikou 3 3 1 2 25% 40% 25% 50%

Ningbo 2 2 1 1 30% 40% 30% 40%

Source: CRIC; AMTD Equity Research

Government still executes the old ways to cool down the physical market: 1) control the

pace of home demand releasing; 2) control pre-sales price of new residential projects.

However, DOES IT WORK? As Figure 2 shows, the efficiency of HPR lasted 6-9 months.

After that, mom growth of home price rebounded again and turned to be positive growth

in next 6-9 months. The last HPR tightening started at October 2016. Home price index

fell from 1 in October 2016 to only 0.3 in January 2017, rebounded to 0.7 in April 2017.

According to HPR history in last 6 years, if the home price rebounded in short term, more



HPR will be introduced in next 6-9 months. We estimate HPR will not be the only policy

introduced this time.

Figure 2: Efficiency of Home Purchase Restriction

Source: NBS; AMTD Equity Research

More than HPR: strict approval of pre-sales price, bond issuance suspension and enlarge land supplies

In 1Q2017, 1st & 2nd tier cities have tightened the approval for pre-sales price, mainly the

tightening measures are 1) pre-sales price of new phase must be lower than previous

phase; or 2) pre-sales price of new residence must be lower than or same as home price

of nearby residences (some cities restrict some price limit at certain district). Regarding

the rule one, it is acceptable because land cost is almost the same in different phases of

same project. It just limits the gross margin upside. However, the rule two may be

nightmare for developers, as land price keep jumping in last few years, home price is

capped as same price of old residences, which are built with much lower land cost years

ago. Some land cost of new residence is almost as same as home price of nearby

residence. Developers have to launch residences after home price of nearby project

surges rapidly, otherwise profitability of new project will be very low.

Another tightening measure is suspension of onshore bond issuance. Most applications of

bond issuance by developers are suspended from 4Q2017. There is no signal that the

suspension will be removed in the short term. As of 19 June 2017, only RMB151.7 bn of

bonds are issued by developers in onshore market, which was RMB621.2 bn in 2016.

Feedback from HK listed developers is consistent: no signal for loosening. However, some

developers have been required to submit supplementary documents, after that, no

response again. On the other hand, permission of offshore issuance from NDRC is still

needed. NDRC curbs approval of offshore bond issuance very strictly. This move also

indicates government intends to cool down land market. High liquidity will boost land price

rapidly, then home price surge simultaneously. The land price and home price form an

infinitive loop of home price rocket until liquidity dries up.

Moreover, land supply have been enlarged by the end of 2016. According to CRIC data,

in Jan. to May 2017, land supplies in 1st/2nd/3rd tier cities increased 31.2%/12.3%/21.8%

yoy. However, as credit tightening from 4Q2016, land sold in GFA recorded -1.3% yoy

decline in 1st tier cities, only 3.2%/13.7% yoy growth in 2nd/3rd tier cities. Land supply in

GFA in Shanghai Beijing and Shenzhen recorded 52.9%/56.8%/65.7% yoy growth, but

land sold in GFA in Shanghai and Beijing recorded only 1.9% and 8.4% yoy growth.

Shenzhen recorded 97.4% yoy growth, but sold over supply ratio is only 55%, much lower

than those of Beijing, Shanghai and Guangzhou, which are over 70%.

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2009-01 2009-09 2010-05 2011-01 2011-09 2012-05 2013-01 2013-09 2014-05 2015-01 2015-09 2016-05 2017-01

Home Price Indices of New Residence in 70 main Cities (MoM)

Investment demand curb by state council (Jan. 2010)

Higher downpayment ratio & HPR introduction (Jan. 2011)

HPR/ mortgage curb & enlarge land supply (July. 2011)

HPR introducted in more cities (Jan. 2013)

HPR/ mortgage loosen (Sep. 2014)

Downpayment ratio cut (Mar. 2015)

HPR tightening (Oct. 2016)



Figure 3: Land supply in 1st / 2nd / 3rd tier cities

Cities Cities in Chinese GFA Sold in Jan. to May. 2016

(sq.m) GFA Sold in Jan. to May. 2017

(sq.m) yoy Growth

1st tier cities

Shanghai 上海 3,498,081 5,347,308 52.9%

Beijing 北京 1,654,813 2,594,801 56.8%

Guangzhou 广州 3,967,448 3,320,736 -16.3%

Shenzhen 深圳 2,024,966 3,356,256 65.7%

Sub-total 11,145,308 14,619,101 31.2%

2nd tier cities

Wuhan 武汉 11,389,221 16,586,325 45.6%

Chengdu 成都 9,091,105 9,902,280 8.9%

Tianjin 天津 15,280,436 17,248,491 12.9%

Qingdao 青岛 11,855,321 12,711,903 7.2%

Changsha 长沙 4,385,823 4,681,406 6.7%

Nanjing 南京 5,367,529 5,986,089 11.5%

Kunming 昆明 6,222,336 6,428,290 3.3%

Suzhou 苏州 5,662,251 4,717,869 -16.7%

Hangzhou 杭州 7,074,045 8,264,946 16.8%

Nanning 南宁 4,157,098 6,058,990 45.8%

Nanchang 南昌 4,108,088 4,044,492 -1.5%

Ningbo 宁波 8,077,626 8,303,321 2.8%

Dalian 大连 4,930,953 4,601,525 -6.7%

Fuzhou 福州 690,093 814,866 18.1%

Sub-total 98,291,925 110,350,793 12.3%

3rd tier cities

Zhongshan 中山 1,869,553 1,901,280 1.7%

Dongguan 东莞 3,832,863 3,584,926 -6.5%

Changzhou 常州 8,117,410 9,216,692 13.5%

Wuxi 无锡 3,375,159 2,982,048 -11.6%

Weifang 潍坊 24,212,572 31,820,039 31.4%

Zhenjiang 镇江 5,867,589 7,726,158 31.7%

Baotou 包头 2,130,686 2,956,351 38.8%

Huizhou 惠州 3,382,537 2,603,375 -23.0%

Haikou 海口 1,055,870 1,113,864 5.5%

Wenzhou 温州 3,775,275 7,128,350 88.8%

Beihai 北海 260,745 273,544 4.9%

Langfang 廊坊 892,401 1,195,246 33.9%

Dongying 东营 4,656,462 6,531,048 40.3%

Lianyungang 连云港 2,435,865 3,257,711 33.7%

Changde 常德 4,946,472 4,874,530 -1.5%

Jiangmen 江门 2,632,319 3,175,286 20.6%

Jinhua 金华 4,844,136 6,154,222 27.0%

Zhaoqing 肇庆 5,718,467 5,400,560 -5.6%

Taizhou 泰州 1,184,226 1,918,438 62.0%

Taian 泰安 3,331,442 4,426,820 32.9%

Mudanjiang 牡丹江 1,307,975 1,745,785 33.5%

Anqing 安庆 2,937,307 3,466,687 18.0%

Shantou 汕头 2,423,536 2,246,422 -7.3%

Yueyang 岳阳 952,157 1,442,879 51.5%

Sub-total 96,143,024 117,142,261 21.8%

Total 205,580,257 242,112,155 17.8%




Sales growth momentum halted

Tightening policies show their efficiency.

In Jan. 2013, more cities introduced HPR, GFA sold growth declined from 17.3% yoy in

2013 to -7.6% yoy in 2014. In 2015, the GFA sold growth rebounded to 6.5% yoy, but

much lower than that of 2013. As the HPR loosening in 2016, GFA sold growth rebounded

22.5% yoy in 2016. However, HPR tightening comes again, the growth in Jan. to May 2017

fell to 14.3% yoy, which was up 33.2% in Jan. to May 2016.

Figure 4: Cumulative GFA sold in China

Source: NBS

The 15.7% growth seems to be good in tightening situation. However, GFA sold

breakdown by cities will show you different views:

In 1st tier cities, GFA sold in Shanghai/Beijing/Shenzhen fell 41.4%/35.6%/53.1% yoy.

Overall, GFA sold in 1st tier cities declined by 31.4%

In 2nd tier cities, Only 2 of 13 cities recorded positive yoy growth. GFA sold in 2nd tier cities

declined by 28.2%

In 3rd tier cities, sales growth becomes polarization. Sales growth in

Langfang/Beihai/Yueyang jumped to 322.1%/314.2%/161.6% yoy. Sales growth in

Shantou/Haikou/Wuxi fell to -85.5%/-70.4%/-69.1%. GFA sold in 3rd tier cities was down

by 25.8%. Our guess is the growth of home sales may be in lower tier cities not

tracked.

Figure 5: GFA sold and yoy growth in 1st tier cities in Jan. to May 2017


17.3%

-7.6%

6.5%

22.5%

33.2%

14.3%

-10%

0%

10%

20%

30%

40%

0

500

1,000

1,500

2,000

2013 2014 2015 2016 2016Jan. to

May

2017Jan. to

May

Cumulative GFA Sold (mn sq.m)

Cumulative GFA Sold (YTD YoY）

-41.4%-35.6%

5.2%

-53.1%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Shanghai Beijing Guangzhou Shenzhen

GFA Sold in Jan. to May. 2016 GFA Sold in Jan. to May. 2017 YTD YoY Growth



Figure 6: GFA sold and yoy growth in 2nd tier cities in Jan. to May 2017


Figure 7: GFA sold and yoy growth in 3rd tier cities in Jan. to May 2017


Pre-sales price approval is the key in 2H2017

Moreover, pre-sales price approval is the key factor that developers have to worry. If the

pre-sales price is approved at a low price, profitability will be much lower than expectation.

However, if the developers hold on launching, interest burden will lower profit. It becomes

a dilemma for developers. Most developers are patient to wait till Golden Sept. & Silver

Oct (金九银十 ) in order to launch new supplies at desirable price. The strict

tightening intends to cool down the market and lower home price, not clamp down

the market.

-31.1%

-69.4%

6.7%

-58.1%

-16.3%

-51.1%

-28.3%

-2.2% -3.2%

14.6%

-35.0%

-86.6%

-2.2%

-100%

-80%

-60%

-40%

-20%

0%

20%

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000W

uhan

Che

ngdu

Qin

gdao

Nan

jing

Kun

min

g

Suz

hou

Han

gzho

u

Nan

nin

g

Nan

chan

g

Nin

gbo

Fuz

hou

Qua

nzho

u

Hoh

hot


-200%

-100%

0%

100%

200%

300%

400%

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Don

ggua

n

Wux

i

Zhe

njia

ng

Hui

zhou

Jilin

Wen

zhou

Bei

hai

Lan

gfa

ng

Don

gyin

g

Lian

yung

ang

Cha

ngde

Yan

gzho

u

Jian

gmen

Zha

oqin

g

Tai

zhou

Mud

anjia

ng

Anq

ing

Sha

nto

u

Yue

yang




Inventories & Investment

It is unavoidable to discuss these topics in property sector report. We all know property

play crucial role in GDP growth. However, how crucial is the property market?

Last round of loosening succeed in destocking

Due to the strong sales in 2016/17, national inventory months have declined to a very

healthy level of only 21.3 months in May 2017, the lowest level since 2011. This gives

room and time for the tightening policies.

Saleable GFA peaked in Feb. 2016. Then it declined steadily and recorded yoy declined

in Nov. 2016. It is the first time recorded yoy decline of saleable GFA since 2004. In 2015,

government loosened HPR and lowered down payment ratio, which released demand that

have been curbed for 2-3 years. Sales boomed and inventory keep declining. In May 2017,

saleable GFA declined by 8.5% yoy, while saleable residential GFA further declined by

17.8% yoy.

Figure 8: Healthy inventory months give room and time window for tightening policies to play out

Source: NBS; AMTD Equity Research

Figure 9: saleable residential GFA Figure 10: saleable GFA

Source: NBS Source: NBS

-20

-10

0

10

20

30

40

50

60

0

10,000

20,000

30,000

40,000

50,000

201

2-02

201

2-07

201

2-12

201

3-05

201

3-10

201

4-03

201

4-08

201

5-01

201

5-06

201

5-11

201

6-04

201

6-09

201

7-02

Saleable residantial GFA ('0000 sq.m)

Saleable residantial GFA YoY (%)

-10

0

10

20

30

40

50

0

20,000

40,000

60,000

80,000

201

2-02

201

2-07

201

2-12

201

3-05

201

3-10

201

4-03

201

4-08

201

5-01

201

5-06

201

5-11

201

6-04

201

6-09

201

7-02

Saleable GFA ('0000 sq.m)

Saleable GFA YoY (%)



Fierce competition of land auction in 2nd tier cities, more capital flows into 3rd tier cities recently.

According to Wind, the land sold in top 100 cities declined in last four years. Over 50%/40%

of GFA sold are contribution from 3rd/2nd tier cities. In terms of value of land sold, 3rd tier

cities only contributed 23.2% of total value. 61.9% of total value are contributed by 2nd tier

cities.

Before 2015, most of developers were chasing land bank in 1st tier cities. Land auctions

became fiercer. Average premium rate of land sold in 1st tier cities is 25.3%. Some

developers shifted to 2nd tier cities for better margin. The success of these developers

attracted more developers entered 2nd tier and 3rd tier cities, especially satellite cities of 1st

tier cities, e.g: Huizhou, Dongguan, Suzhou, Jiaxin and Langfang. Premium rate of land

sold in 2nd tier and 3rd tier cities jumped from single digit to over 60%, even over 90%.

Figure 11: Land sold in 100 cities

Source: Wind

Figure 12: Value of land sold in 100 cities

Source: Wind

Figure 13: Premium rate of land sold in 100 cities

Source: Wind

0

500

1,000

1,500

2,000

2013 2014 2015 2016 2016 Jan. to May 2017 Jan. to May

Land sold in 1st tier cities in 100 cities (GFA mn sq.m) Land sold in 2nd tier cities in 100 cities (GFA mn sq.m)Land sold in 3rd tier cities in 100 cities (GFA mn sq.m)

0

500

1,000

1,500

2,000

2,500

3,000


Value of land sold in 1st tier cities in 100 cities (RMB bn) Value of land sold in 2nd tier cities in 100 cities (RMB bn)Value of land sold in 3rd tier cities in 100 cities (RMB bn)

0

50

100

150 Premium rate of land price 1st tier cities Premium rate of land price 2nd tier cities

Premium rate of land price 3rd tier cities



Real estate investment come to steady and healthy growth after unreasonable growth in 2011-2013.

Newly commencement always lag behind by GFA sold. Gap between newly commence

GFA and GFA sold is narrowing in the last four years. Growth of newly commence GFA

are lower than that of GFA sold in 2015/2016/first 5 months of 2017. It indicates 1)

Developers are more cautious on commencement, in order to avoid liquidity crisis; and 2)

policy uncertainty in the near term.

Figure 14: Newly commence GFA and GFA sold

Source: NBS

As more cities introduced HPR in early 2013, growth of GFA sold and completed

investment of real estate came to a turning point in 2013. Growth of completed investment

declined from 2013 to 2015, bottomed out in 2015, due to loosening of HPR. Although

saleable GFA is declining, developers are still cautious on newly commencement. HPR

loosening released demands in 2015, meanwhile, home price surged again. Growth of

home price is higher than government’s expectation in 2016, new round of HPR tightening

has come 4Q2016. Policy uncertainty and credit tightening affect developers’ confidence.

Figure 15: Completed investment of real estate Figure 16: Completed investment of residence

Source: NBS Source: NBS

13.5%

16.2%

-14.0%

8.1%

18.3%

9.5%

17.3%

-7.6%

6.5%

22.5%

33.2%

14.3%

-20%

-10%

0%

10%

20%

30%

40%

0

500

1,000

1,500

2,000

2,500


Newly commence GFA (mn sq.m) Cumulative GFA Sold (mn sq.m)

Newly commence GFA (YTD YoY %) Cumulative GFA Sold (YTD YoY）

33.2%27.9%

16.2%19.8%

10.5%

1.0%

6.9%7.0%

8.8%

0%

10%

20%

30%

40%

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015 2016 2016Jan.to

May.

2017Jan.to

May.

Completed investment of real estate (RMB bn)

YoY

32.9%

30.2%

11.4%

19.4%

9.2%

0.4% 6.4% 6.8%

10.0%

0%

10%

20%

30%

40%

01,0002,0003,0004,0005,0006,0007,0008,000

2010 2011 2012 2013 2014 2015 2016 2016Jan.to

May

2017Jan.to

May

Completed investment of residence(RMB bn)

YoY



Consolidators are growing fast

Giants are gaining more market share, which have been priced in share price. However,

will share price keep gaining in 2H2017?

Great financial improvement after a loosening year.

Loosening in 2015 and 2016 further released home demand in 2016. Home sales

rebounded and home price surged in 2016. All developers have grasped the window

period to improve sales performance. Besides, 18 of 29 developers have reduced their net

gearing ratio in FY16. The highest reduction is Jingrui, which declined 107 pts of net

gearing ratio. In the giants group, COLI and Country Garden reduced their net gearing

ratio by 29.4 pts and 34.6 pts. In mid-size group, Times ppty./Sino-ocean/Future Land/

reduced their net gearing ratio by 46.8/20.5/20.4 pts. There are some exceptions, e.g.:

Evergrande up 206 pts with very aggressive land acquisitions; Sunac China up 157.7 pts

with land acquisitions; R&F up 48.1 pts; Modern Land up 38.8 pts with land replenishment.

.

Figure 17: Net gearing ratio comparison

Net gearing Ratio

% FY2014 FY2015 FY2016 FY14/FY15 Change (pts) FY15/FY16 Change (pts)

Country Garden 50.6 82.0 47.4 31.4 -34.6

Vanke 6.3 14.5 30.5 8.2 16.1

Evergrande 226.6 260.5 466.7 33.9 206.1

COLI 29.1 38.1 8.6 9.0 -29.4

Sunac 22.1 37.9 195.5 15.7 157.7

Longfor 57.6 55.0 54.1 -2.6 -0.9

CR Land 41.9 33.6 33.3 -8.3 -0.3

CIFI 48.1 54.8 50.7 6.7 -4.2

Shimao 66.9 59.4 52.4 -7.4 -7.0

Greentown 97.7 98.5 91.2 0.8 -7.3

Future Land 64.1 66.9 46.5 2.8 -20.4

R & F Properties 171.2 119.7 167.8 -51.5 48.1

Agile 76.6 62.5 66.4 -14.1 3.9

BJ Capital Land 87.2 112.5 132.4 25.3 19.9

Sino-ocean 58.9 59.0 38.5 0.1 -20.5

Poly Property 113.5 130.4 112.1 16.9 -18.3

Logan 80.3 63.7 76.2 -16.6 12.6

Yuexiu 65.3 75.8 65.8 10.5 -10.0

Jinmao 72.0 64.8 61.4 -7.2 -3.5

Kaisa 431.9 528.7 332.6 96.8 -196.0

COGO 90.4 76.1 71.2 -14.3 -4.9

Times property 146.6 120.2 73.4 -26.5 -46.8

SCE 94.3 89.1 109.1 -5.2 20.0

Aoyuan 105.2 73.7 62.2 -31.6 -11.5

Central China 64.2 43.3 65.5 -20.9 22.1

Powerlong 71.4 67.2 75.4 -4.2 8.2

Modern Land 52.9 76.1 114.9 23.2 38.8

Jingrui 193.7 214.3 107.3 20.5 -107.0

Fantasia 107.6 98.1 96.1 -9.5 -1.9

Source: Bloomberg, companies, AMTD Equity Research



Booking margins also have improved in FY16

Booking GPM in FY16 have significantly improved. In FY15, only 4 of 29 companies

recorded yoy increase of GPM. In FY16, only 7 of 29 companies recorded decline of GPM.

Regarding ROE, Country Garden/Vanke/COLI’s ROE are over 15%; some mid-size

companies have very high ROE: Logan 27.2%, SCE 27.0%, Times ppty. 24.1%, Shimao

20.2%

Figure 18: Profitability comparison

Gross Margin Net Income Margin ROE

FY2014 FY2015 FY2016 FY14/FY15

Change FY15/FY16

Change FY2014 FY2015 FY2016 FY14/FY15

Change FY15/FY16

Change FY2014 FY2015 FY2016

Country Garden 26.1 20.2 21.1 -5.9 0.9 12.1 8.2 7.5 -3.9 -0.7 20.3 15.2 17.0

Vanke 25.1 22.2 25.5 -2.9 3.3 11.4 10.2 9.2 -1.2 -1.0 19.1 19.2 19.7

Evergrande 28.5 28.1 28.1 -0.4 0.0 15.2 11.7 7.4 -3.5 -4.2 25.3 20.5 10.7

COLI 30.0 28.8 28.8 -1.3 0.0 20.8 21.6 23.3 0.8 1.7 22.3 20.2 17.1

Sunac 17.3 12.4 13.7 -4.9 1.3 12.9 14.3 7.9 1.5 -6.5 21.5 18.7 11.7

Longfor 26.5 27.4 29.1 0.9 1.6 16.4 19.0 16.7 2.6 -2.3 19.7 17.5 15.7

CR Land 30.5 31.1 33.7 0.6 2.6 16.9 17.0 17.8 0.2 0.8 15.9 16.0 16.8

CIFI 32.5 28.5 27.6 -4.0 -0.9 14.5 10.6 8.7 -3.9 -1.9 18.3 12.6 10.1

Shimao 25.9 22.7 25.4 -3.1 2.7 11.5 11.7 12.6 0.2 0.9 19.8 18.2 20.2

Greentown 25.4 20.8 20.8 -4.6 0.0 6.5 3.1 6.6 -3.3 3.5 7.1 2.2 7.9

Future Land 18.7 20.4 23.4 1.7 3.0 5.0 4.3 4.9 -0.6 0.6 14.3 13.0 15.9

R & F Properties 35.4 32.1 28.3 -3.3 -3.8 20.9 15.2 13.1 -5.7 -2.1 15.5 12.2 16.0

Agile 32.4 25.1 26.5 -7.3 1.3 12.1 4.1 5.8 -8.0 1.7 13.6 4.1 6.6

BJ Capital Land 25.0 12.1 10.8 -13.0 -1.2 18.0 14.0 10.7 -4.0 -3.2 19.0 17.0 12.7

Sino-ocean 21.0 20.6 22.1 -0.4 1.5 11.8 7.7 11.0 -4.1 3.3 11.1 5.2 8.7

Poly Property 19.8 11.5 16.3 -8.3 4.8 3.3 -10.8 0.5 -14.0 11.3 3.1 -10.2 0.3

Logan 30.4 30.4 31.9 0.0 1.5 18.8 18.2 21.9 -0.6 3.7 25.3 21.4 27.2

Yuexiu 26.4 21.1 20.8 -5.3 -0.3 15.7 4.6 7.4 -11.2 2.8 9.3 3.4 5.1

Jinmao 39.1 38.7 37.4 -0.5 -1.3 17.9 17.1 9.3 -0.8 -7.9 17.1 12.2 7.9

Kaisa 14.6 3.1 13.0 -11.5 9.9 -6.6 -10.3 -3.4 -3.7 6.8 -8.3 -8.0 -4.6

COGO 24.1 15.6 17.2 -8.4 1.5 9.1 5.1 5.3 -3.9 0.1 10.7 7.3 8.3

Times property 30.6 26.0 26.2 -4.6 0.2 12.3 10.4 12.1 -1.9 1.6 27.1 22.7 24.1

SCE 34.9 28.2 25.0 -6.7 -3.1 13.1 10.9 17.0 -2.2 6.1 14.7 13.6 27.0

Aoyuan 29.6 27.6 27.7 -2.0 0.1 11.6 8.5 7.4 -3.1 -1.0 10.8 10.2 10.3

Central China 33.6 22.2 24.1 -11.4 2.0 9.6 6.4 4.2 -3.2 -2.1 14.2 12.1 6.1

Powerlong 28.8 32.9 33.4 4.1 0.5 14.6 18.7 18.3 4.1 -0.4 7.7 10.6 11.4

Modern Land 40.6 30.9 19.5 -9.6 -11.5 12.8 9.1 7.9 -3.7 -1.2 19.5 17.4 15.8

Jingrui 18.3 3.0 4.1 -15.3 1.0 5.2 -5.3 1.2 -10.5 6.4 8.1 -10.0 3.2

Fantasia 38.4 30.9 32.3 -7.6 1.5 17.8 15.6 7.7 -2.2 -7.9 14.9 12.2 7.5

Source: Bloomberg, companies, AMTD Equity Research



Sales performances of listed developers are unexpectedly good.

Although sales data breakdown by cities shows that the property sales growth slowed

down, it is surprising that listed developers’ performances are unexpectedly good. 5

companies have achieved over 50% of their target. Longfor even achieved 69% of its

target. Developers mainly in 3rd tier cities, Evergrande, Country Garden and COGO,

achieved RMB183 bn, RMB224 bn and HKD13 bn in first 5 months of 2017,

representing 75.9% yoy, 30.9% yoy and 126.5% yoy. We believe there are some

positive factors in 3rd cities: 1) less tightening on pre-sales price approval, 2) lower

home price with lower risk control for commercial banks, 3) destocking in 3rd tier

cities and no HPR in most of 3rd tier cites.

Figure 19: Sales target achievement in Jan. to May 2017

Source: Company data; AMTD Equity Research

Giants, Vanke & COLI, whose core assets locate in 1st and 2nd tier cities, achieved

RMB228 bn and HKD83 bn, down by 1.3% and 0.6% yoy. Sunac/Longfor/CR Land are

catching up with COLI, which achieved RMB80 bn /76 bn/53 bn, representing 91%/54%/49%

yoy growth.

Figure 20: Sales comparison of over RMB20 bn sales in Jan. to May 2017


0%

15%

30%

45%

60%

75%sales target achievement %

30.9%

-1.3%

75.9%

34.8%

-0.6%

91.0%

54.4% 49.0% 43.7% 40.2%

-2.3%-10.4%

113.7%

42.1%

7.7%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

0

100

200

300

400

500

Jan.-May 2017 (RMB Billion)

2017 Sales Target (RMB Billion)

YoY



In the group of below RMB20 bn sales, all of listed developers recorded moderate yoy

growth, from 8% to 35%.

Figure 21: Sales comparison of below RMB20 bn sales in Jan. to May 2017


Sector leaders preformed much better than smaller developers. Market concentration

accelerates and sales scale become the key of developers. The era of oligopoly has

come. Top 20 companies accounted for 25.2% of total sales of commercial house in

China. Top 100 companies accounted for 44.8% of total sales in China. 21-100

ranking companies only accounted for 19.6% of total sales. In first 5 months of 2017,

top 20 accounted for 59.6% of total sales, top 100 accounted for 37.1% of total sales, 21-

100 ranking companies only accounted for 22.5%. Leaders will enjoy lower interest cost,

higher pricing power with strong brand premium and more co-operating opportunities. In

current market environment. We believe in currently situation, more saleable

resource in 3rd tier cities and satellite cities of 1st tier cities should have better sales

performance.

Figure 22: % of Top 20 &100 sales of total home sales in China

Source: Company data; CRIC, NBS

34.1%

3.8%18.8% 21.6%

8.1%

64.9%43.7%

126.5%

0.5%

68.6%

26.9%14.8%

-43.6%

-0.6% -5.2%-27.5%

-100.0%

-50.0%

0.0%

50.0%

100.0%

150.0%

0

10

20

30

40

50

60

70 Jan.-May 2017 (RMB Billion)

2017 Sales Target (RMB Billion)

YoY

18.9% 22.8%23.1%

25.2%

37.1%37.8% 40.0%

44.8%59.6%

0%

10%

20%

30%

40%

50%

60%

70%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2013 2014 2015 2016 2017 Jan.to May

Cumulative sales of commercial house (RMB Bn)Cumulative contracted sales from top 20 companiesCumulative contracted sales from top 100 companiesTop 20 over total sales (%)Top 100 over total sales (%)



Who have got too much land bank?

Low land bank year doesn't mean low growth potential; oppositely, it means health

turnover rate and better sales performance. However, if land bank year is longer than 5

years that would be a signal that the companies have acquired too many land plot without

development abilities. Giants usually have 4.1-5.1 of land bank year, as high turnover.

Holding too many land bank will have more interest cost (most companies acquired land

by leverage). However, if the land bank year is lower than 2.5 years that would be a hint

that the companies face sustainable development issue.

Companies with high land bank year always go with high net gearing ratio, because

inventories have not been converted to profit effectively. If we assume home price

unchanged but growth maintains, more GFA will be sold, how will the land bank year be?

Giants will have 3.4-4.3 years. Sunac still has 7.3 years. Expected land bank year of

Greentown/R&F/Jinmao/Powerlong/Fantasia are higher than 7 years. We still believe 3-5

year should be comfort room for developers, good for balance sheet and lower interest

cost in tightening policy and credit environment.

Figure 23: Land bank comparison

('000 sq.m.) Land bank as of

Dec 2016 Land acquired in

2016 GFA Sold

Land bank year

Expected growth of

sales

Expected GFA sold in

2017

Land bank year (under expected sales)

Country Garden 166,040 87,520 37,827 4.4 29.5% 48,989 3.4

Vanke 112,840 31,570 27,654 4.1 15.3% 31,877 3.5

Evergrande 229,000 102,380 44,690 5.1 20.5% 53,864 4.3

COLI 56,770 9,716 13,358 4.2 8.1% 14,441 3.9

Sunac 72,913 47,730 7,267 10.0 37.0% 9,956 7.3

Longfor 41,475 12,549 5,947 7.0 24.8% 7,422 5.6

CR Land 44,845 10,520 7,806 5.7 20.7% 9,420 4.8

Shimao 30,790 3,965 4,916 6.3 22.6% 6,028 5.1

CIFI 17,500 6,500 3,691 4.7 17.4% 4,335 4.0

Greentown 45,570 2,282 6,245 7.3 -6.1% 5,867 7.8

Future Land 35,320 14,242 5,949 5.9 36.2% 8,102 4.4

R & F Properties 42,965 5,041 4,917 8.7 20.0% 5,900 7.3

Agile 32,600 2,320 5,407 6.0 13.6% 6,143 5.3

BJ Capital Land 11,120 1,660 2,205 5.0 9.8% 2,422 4.6

Sino-ocean 21,699 4,765 2,702 8.0 19.1% 3,218 6.7

Poly Property 19,000 1,230 2,788 6.8 0.3% 2,796 6.8

Logan 14,090 1,966 3,201 4.4 20.2% 3,847 3.7

Yuexiu 9,660 4,210 2,560 3.8 9.1% 2,793 3.5

Jinmao 35,825 6,211 2,388 15.0 54.8% 3,697 9.7

Kaisa 21,300 1,622 2,269 9.4 n.a. n.a. n.a.

COGO 17,741 1,353 2,674 6.6 -0.1% 2,672 6.6

Times property 13,064 3,438 2,714 4.8 10.8% 3,008 4.3

SCE 9,100 1,680 1,797 5.1 19.0% 2,139 4.3

Aoyuan 14,650 3,140 2,966 4.9 30.1% 3,858 3.8

Central China 20,920 1,510 3,017 6.9 33.0% 4,013 5.2

Powerlong 13,200 3,823 1,508 8.8 13.4% 1,710 7.7

Modern Land 5,403 2,080 1,436 3.8 32.9% 1,908 2.8

Jingrui 3,023 986 1,353 2.2 n.a. n.a. n.a.

Fantasia 14,976 n.a. 1,325 11.3 22.9% 1,629 9.2

Source: Bloomberg, Company data



Be cautious on giants, look for safe margin after consolidators gained more YTD

We expect the property sector valuation to de-rate in 2H17. We selectively overweigh

developers with achievable presales growth, less share price gain YTD, and relatively low

valuation. We are cautious on developers with big share price gains YTD, as main

consolidators, Evergrande and Country Garden performed very well YTD, up 187% and

106%. Thanks to the rapid growth of contracted sales in 3rd tier cities. Sunac also gained

137% YTD. Future Land and COGO have rapid growth of contracted sales in Jan. to May

2017, which have priced in the share price as well. As HPR continues, sales performance

is expected to be affected, high yoy growth in first 5 months in 2017 might not happen

again in 2H2017. Sales in 1st /2nd cities are expected to slow down, sales in 3rd tier cities

and satellite cities of 1st tier cities expected to keep robust in 2H2017. However, positive

factors of 3rd tier cities have been priced in share price of Evergrande/ Country

Garden/ COGO.

Or we should look at some names with low valuation, lower gain YTD, high growth

potential, high ROE and moderate dividend yield. Currently, new round of HPR has

started, we haven’t seen HPR influence on valuation. Moreover, if home sales slows down,

we should choose some defensive names in foreseeable downtrend of valuation. The

current P/E of property sector is about 8.3x, approaching their highs in 2015 and in

2012. We look back to 6 year ago, the hardest time in 2011, the market cap weighted

P/E of property sector was only 3.9x. Giants and 3rd tier cities players with 8x P/E

and over 50% gain YTD should be avoided. On the other hand, names with low P/E

& P/B, 15% ROE and high dividend yield should be have higher safety margin and

attractive for long-only funds.

Figure 24: Market cap weighted PE vs. Home price indices mom

Source: Bloomberg; NBS; AMTD Equity Research

Figure 25: Share price gain comparison

Source: Bloomberg; NBS; AMTD Equity Research

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

0x

2x

4x

6x

8x

10x

12x

14x

16x

2009-01 2010-01 2011-01 2012-01 2013-01 2014-01 2015-01 2016-01 2017-01

Marcap weighted P/E Home Price Indices of New Residence in 70 main Cities (MoM)

Investment demand curb by state council (Jan. 2010)

Higher downpayment ratio & HPR introduction (Jan. 2011)

HPR/ mortgage curb & enlarge land supply (July. 2011)

HPR introducted in more cities (Jan. 2013)

HPR/ mortgage loosen (Sep. 2014)Downpayment ratio cut (Mar. 2015)

HPR tightening (Oct. 2016)

187%

137%

106%87% 83% 82%

68% 63% 57%46% 44% 42% 37% 33% 33% 31% 30% 29% 28% 25% 25% 24% 19% 13% 11% 10% 5%

0%

50%

100%

150%

200%



Figure 26: Peers comparison

Company Currency Mkt Cap Last price PER PB D/Y% ROE (%)

(million) (HKD) 17F 18F 19F 17F 18F 19F 17F 17F

Country Garden HKD 190,785 8.94 11.6 9.1 7.0 2.0 1.7 1.3 2.7 19.2

Vanke HKD 312,305 22.20 8.4 7.2 6.5 1.6 1.4 1.3 4.9 20.8

Evergrande HKD 182,450 13.94 13.0 8.6 6.6 2.7 2.1 1.6 4.3 21.6

COLI HKD 249,801 22.80 7.2 6.4 5.8 1.0 0.9 0.8 3.6 14.6

Sunac HKD 60,067 15.40 18.7 10.4 7.2 2.0 1.8 1.5 1.8 9.4

Longfor HKD 97,245 16.56 8.9 7.7 6.5 1.2 1.1 1.0 3.7 14.9

Cr Land HKD 156,986 22.65 8.2 7.1 6.3 1.2 1.0 0.9 3.5 15.6

CIFI HKD 45,589 13.46 5.9 5.1 4.5 0.7 0.6 0.6 6.1 12.1

Shimao HKD 22,421 3.29 5.4 4.4 3.7 1.1 0.9 0.8 6.7 21.8

Greentown HKD 18,583 8.59 8.7 7.9 7.6 0.6 0.6 0.5 2.0 6.6

Future Land HKD 16,408 2.90 8.1 5.6 4.8 1.3 1.1 0.9 3.3 21.4

R & F HKD 38,991 12.10 4.6 4.2 3.8 0.7 0.6 0.6 9.1 15.7

Agile HKD 27,811 7.10 6.6 5.8 5.2 0.6 0.6 0.5 6.2 9.2

BJ Capital Land HKD 11,052 3.65 5.7 4.1 n.a. 0.6 0.6 n.a. 6.6 19.3

Sino-Ocean HKD 28,333 3.77 6.7 5.8 5.1 0.5 0.5 0.5 5.9 8.4

Poly Property HKD 12,303 3.36 33.3 19.3 15.6 0.5 0.5 0.5 0.4 1.4

Logan HKD 29,350 5.34 6.2 4.7 4.0 1.2 1.0 0.9 5.7 18.8

Yuexiu HKD 16,246 1.31 8.7 7.4 6.9 0.4 0.4 0.4 4.9 5.2

Jinmao HKD 32,337 3.03 8.9 7.4 6.5 0.8 0.8 0.7 4.4 10.3

COGO HKD 9,448 4.14 6.2 5.3 4.5 0.7 0.7 0.6 1.0 13.4

Times Property HKD 8,412 4.83 3.4 2.5 2.5 0.7 0.6 0.5 9.3 21.9

SCE HKD 11,436 3.34 6.2 4.7 3.6 1.0 0.9 0.7 5.0 17.8

Aoyuan HKD 6,171 2.31 4.2 3.3 2.7 0.5 0.5 0.4 9.1 14.5

Central China HKD 4,298 1.76 3.6 2.7 3.3 0.5 0.4 0.4 8.0 15.0

Powerlong HKD 13,391 3.35 4.8 4.1 3.8 0.5 0.4 0.4 5.7 10.8

Modern Land HKD 3,079 1.23 3.1 2.8 2.5 0.4 0.5 0.4 8.5 18.6

Fantasia HKD 6,396 1.11 6.9 5.1 4.2 0.5 0.5 0.4 5.2 6.9

Median 6.7 5.6 5.0 0.7 0.6 0.6 5.0 14.9

Simple Average 8.3 6.3 5.4 0.9 0.8 0.7 5.1 14.3

Weighted Average 9.2 7.3 6.1 1.4 1.2 1.0 4.2 16.7

Source: Bloomberg; AMTD Equity Research Note: As of 29 June 2017


IMPORTANT DISCLOSURES

Analyst Certification

We, Donald Yu and Michelle Li, hereby certify that (i) all of the views expressed in this research report reflect accurately our personal views about the subject company or companies and its or their securities; and (ii) no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed by us in this research report, nor is it tied to any specific investment banking transactions performed by AMTD Asset Management Limited. Firm Disclosure

AMTD Asset Management Limited has investment banking relationship with R&F Properties, Logan and Aoyuan and/or its affiliate(s) within the past 12 months.

AMTD Asset Management Limited Address: 23/F & 25/F, Nexxus Building, No. 41 Connaught Road Central, Central, Hong Kong Tel: (852) 3163-3288 Fax: (852) 3163-3289

GENERAL DISCLOSURES

The research report is prepared by AMTD Asset Management Limited (“AMTD”) and is distributed to its selected clients. This research report provides general information only and is not to be construed as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such offer or solicitation would be illegal. It does not (i) constitute a personal advice or recommendation, including but not limited to accounting, legal or tax advice, or investment recommendations; or (ii) take into account any specific clients’ particular needs, investment objectives and financial situation. AMTD does not act as an adviser and it accepts no fiduciary responsibility or liability for any financial or other consequences. This research report should not be taken in substitution for judgment to be exercised by clients. Clients should consider if any information, advice or recommendation in this research report is suitable for their particular circumstances and seek legal or professional advice, if appropriate. This research report is based on information from sources that we considered reliable. We do not warrant its completeness or accuracy except with respect to any disclosures relative to AMTD and/or its affiliates. The value or price of investments referred to in this research report and the return from them may fluctuate. Past performance is not reliable indicator to future performance. Future returns are not guaranteed and a loss of original capital may occur. The facts, estimates, opinions, forecasts and any other information contained in the research report are as of the date hereof

and are subject to change without prior notification. AMTD, its group companies, or any of its or their directors or employees (“AMTD Group”) do not represent or warrant, expressly or impliedly, that the information contained in the research report is correct, accurate or complete and it should not be relied upon. AMTD Group will accept no responsibilities or liabilities whatsoever for any use of or reliance upon the research report and its contents. This research report may contain information from third parties, such as credit ratings from credit ratings agencies. The reproduction and redistribution of the third party content in any form by any mean is forbidden except with prior written consent from the relevant third party. Third party content providers do not guarantee the timeliness, completeness, accuracy or

availability of any information. They are not responsible for any errors or omissions, regardless of the cause, or for the results obtained from the use of such content. Third party content providers give no express or implied warranties, including, but not limited to, any warranties of merchantability of fitness for a particular purpose or use. Third party content providers shall not be liable for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or profits and opportunity costs) in connection with any use of their content. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities for investment purposes, and should not be relied on as investment advice. To the extent allowed by relevant and applicable law and/or regulation: (i) AMTD, and/or its directors and employees may deal as principal or agent, or buy or sell, or have long or short positions in, the securities or other instruments based thereon, of issuers or securities mentioned herein; (ii) AMTD may take part or make investment in financing transactions with, or provide other services to or solicit business from issuer(s) of the securities mentioned in the research report; (iii) AMTD may make a market in the securities in respect of the issuer mentioned in the research report; (iv) AMTD may have served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this research report or may be providing, or have provided within the previous 12 months, other investment banking services, or investment services in relation to the investment concerned or a related investment.

AMTD controls information flow and manages conflicts of interest through its compliance policies and procedures (such as, Chinese Wall maintenance and staff dealing monitoring). The research report is strictly confidential to the recipient. No part of this research report may be reproduced or redistributed in any form by any mean to any other person without the prior written consent of AMTD Asset Management Limited.

Bubble Burst? Nope! Just Slow Down! - AMTD Group

Documents

Transcript of Bubble Burst? Nope! Just Slow Down! - AMTD Group